Customer Satisfaction & Omni-channel Opportunities

Posted on March 29, 2016

One of the most important factors in retail today is customer service and satisfaction. This is the heart of most business models and major retail chains, and stores continually focus to improve it. However, with a recently revived economy, customer satisfaction and service scores have dropped again for a second year in-a-row. According to the American Customer Satisfaction Index, at the end of last year scores fell approximately 2 percent to 74.8 on a 100 point scale.

Lower customer satisfaction was evident even as the economy has been recovering and job security and new jobs increased. This was the case not only for brick & mortar stores, but also for online retailers. Supermarkets which usually score high marks, also received their lowest scores in a decade. For example, Whole Foods took a 10 percent hit, possibly due to a reputation for high prices, though the company has made efforts to lower prices to be more competitive.

“When consumers put a premium on service and quality, smaller companies often achieve higher customer satisfaction scores, and it’s the smaller independent chains that continue to set the bar for supermarkets,” said David VanAmburg, ACSI managing director. There is without a doubt an opportunity for smaller companies to showcase their resiliency in providing better customer experience and achieve higher customer service standards in the current market.

The only retail sector that saw a positive gain in customer satisfaction is the gasoline stations sector, due to the low cost of fuel. The health and personal care stores sector were the biggest losers.

In the Department and Discount Stores category, Macy’s is the biggest loser here among the department and discount stores category with a drop of 6% in customer satisfaction, followed by Target with a 5% drop.

In the Specialty Retail Store category, the survivors in this list are TJMaxx and GameStop with a 0% and 1% increase, respectively, in consumer satisfaction. Surprisingly Lowe’s and Bed Bath & Beyond are the biggest losers with a 7% and 6% drop, respectively.

In the Gasoline Stations category, low fuel prices continue to drive customer satisfaction for gasoline stations, but for how much longer will the prices stay low?

In the Supermarkets category, Target has a significant drop here with a score ten percent lower than the previous year. H-E-B and Aldi are doing ok with no drop in customer satisfaction.

In the Internet Retailers category, stores have also fallen prey to lower customer satisfaction ratings with an overall 2% drop in customer satisfaction.

In the Health & Personal Care Stores category, most stores are doing ok, except for Rite Aid which has a huge drop of 9% in customer satisfaction ratings. Surprisingly Target is the big winner here with a 2% increase in customer satisfaction.

Source: ACSI national economic indicator is based on 70,000 customer interviews that have been analyzed with more than 300 companies in 43 industries, including retailing.

One of the ways companies can remedy the situation from lower customer satisfaction and service ratings, is to allocate more money into omni-channel marketing. This will enable companies to seamlessly connect new digital front-end experiences to their back-end systems and infrastructure. “As online and physical worlds come even closer together, the development of ‘the connected store’ will become a key differentiator for retailers,” says Richard Clarke, Global Retail Director for Strategy & Business Development at Fujitsu. Moving into the realm of integrating digital channels with in-person sales and services are becoming increasingly crucial as it proves to increase customer retention, loyalty, and even customer experience.

By delving deeper into omni-channel marketing and investments, it can provide companies a key to understanding customers’ needs and concerns across all platforms, regarding a product or service. According to Business Wire, CEOs are investing a lot into one area which is costing them the most: order fulfillment options. Based on their survey, CEOs are spending 26 percent of their investment capital on omni-channel readiness in 2016, from which will be allocated towards extending omni-channel fulfillment options, seamless customer shopping experience, and on understanding social media for business use.

Another way to improve customer satisfaction ratings besides omni-channel marketing is by utilizing integrated marketing communications. It is different from omni-channel marketing in which it is an application of consistent brand messaging across both traditional and non-traditional marketing channels, and it implements different promotional methods in order to reinforce each other effectively. Sometimes omni-channel marketing may fall short in certain situations where “it just doesn’t translate well in mobile” or “people are increasingly using ad blocking software.”

Integrated marketing has an advantage to allow companies to phrase their message or brand appropriately to each marketing channel’s mode of reaching out to the consumer. Integrated marketing can save companies money to eliminate duplication in areas such as graphics and photography, in which those materials can be shared across all different platforms. The consistent language and brand presentation helps nurture long term relationships with customers. And lastly, it helps customers proceed effortlessly through various stages of the buying process.

However, integrated marketing has many challenges in itself which requires a lot of effort in implementing proper planning, redefining the scope of marketing communication, and application of information technology, financial, and strategic integration. Sometimes there is a lack of managerial support from top management when marketing budgets get diluted, and as a result the effectiveness suffers. In relation to that, there are also lack of accurate metrics to effectively evaluate and justify its cost effectiveness to a CEO, who may easily cut it from the company budget.

Currently omni-channel marketing seems to be the main focus for most companies and their CEOs to transform their efforts into playing digital catch-up to the highly competitive marketplace. Although omni-channel marketing is gaining momentum, it is also important to consider implementing other marketing strategies, such as integrated marketing communications to build your brand consistently and effectively, and to gain a better sense of what metrics you want to see improve, such as customer satisfaction.